Chile Jails Four Fund Executives Before Trial in an Alleged US$193 Million Fraud
Chile · Courts
Key Facts
- Who is in custodyPedro Pablo Larraín Mery, founder and controlling shareholder of Sartor AGF; his brother Carlos Emilio Larraín Mery; Michael Clark Varela; and Sergio Yáñez Astete, who founded the E-Capital factoring business and was never a Sartor insider.
- Who ordered itThe Fourth Guarantee Court of Santiago, judge Paulina Moya, on 18 August.
- It is not a convictionPrisión preventiva is a precautionary measure while an investigation proceeds. Eleven people were formalizados — placed under formal investigation, a step short of indictment. Prosecutors sought custody for five and got four.
- The moneyThe charging itemises US$78,562,257 plus 104,640,516,271 Chilean pesos — about US$193 million at the 18 August rate. Prosecutors describe a range of US$100–200 million; lawyers for investors say more than US$200 million.
- The alleged offencesDisloyal administration, false information to the market, incompatible negotiation, fraud, failure to launch a mandatory tender offer, and money laundering — six of seven found established for the custody ruling.
- One did not stickThe court found the simulated-contract allegation unsupported.
- Already sanctionedIn November 2025 the regulator CMF fined eight of the eleven a combined 367,500 UF and barred them from fund-manager boards for five years. That is administrative, not criminal.
They have not been convicted of anything in the criminal case. But eight of the eleven were already fined by the regulator last year — and that distinction is the story.
A Santiago court ordered four executives held in custody on Tuesday while prosecutors build the Chile Sartor fund case, an alleged fraud whose formal charging itemises about US$193 million of harm to investors. Among them is Michael Clark, until April the president of the company that runs the football club Universidad de Chile.
What pre-trial detention does and does not mean
This matters, because English-language coverage of Latin American cases routinely turns it into a conviction.
Prisión preventiva is precautionary. Under Chile’s criminal procedure code a judge can order it where there is evidence a crime occurred and grounds to believe the accused took part, and then either that detention is indispensable to specific investigative steps, or that the accused’s liberty endangers society or the victim, or that there is a flight risk. It comes before trial, and it can be appealed.
So these four have been formalizados, not convicted. Formalización is the prosecutor’s formal notification that someone is under investigation; the indictment comes later. Of the eleven, the others received house arrest in various forms or bans on leaving the country. Clark is being held at Capitán Yáber, the Larraín brothers and Yáñez at Santiago 1.
What Sartor is alleged to have done
Sartor Administradora General de Fondos ran public investment funds under CMF supervision — by 2024 some sixteen of them, plus mutual funds. These are the products Chilean savers and institutions buy expecting professional management and regulatory oversight.
The prosecution’s account is of money moved in circles: funds allegedly triangulated between related vehicles, including the E-Capital factoring operation, in ways that served the people running the structure rather than the people whose money it was. Prosecutors call it a sophisticated criminal structure that put personal gain ahead of fiduciary duty.
The tender-offer allegation is the one with the football in it. Prosecutors say Clark’s acquisition of control of Tactical Sport amounted to an indirect change of control at Azul Azul, the company that runs Universidad de Chile, and required a mandatory tender offer he never launched. His defence argues none was owed because he bought units in an investment fund that already held 63%. Clark resigned the Azul Azul presidency on 23 April 2026.
No settled figure for how many investors were affected has been published.
The regulator was not absent
It would be easy to write this as a supervisory failure. The record is more complicated.
The CMF suspended new contributions to Sartor’s funds in November 2024, revoked the manager’s authorisation and appointed a liquidator that December, opened a formal sanctioning process in April 2025, and in November 2025 revoked again and fined eight former directors and the ex-general manager a combined 367,500 unidades de fomento, with five-year bans from fund-manager boards.
Then, on 10 August 2026, Chile’s Supreme Court annulled the first revocation for breach of due process — while leaving the second revocation and the fines standing. Sartor AGF remains in liquidation.
So the criminal case is running alongside a regulatory record in which action was taken, and in which one of those actions has already been struck down on procedural grounds.
Why this matters if you invest in Chile
Chile has spent two decades selling itself as the region’s most institutionally reliable place to put money, and its funds industry is central to that pitch. A case in which a CMF-supervised manager of public funds is accused of routing investor money to itself goes to the heart of it.
For anyone holding Chilean fund products, the useful question is whether the gaps this exposed are structural or specific to one manager. That is what the case will actually settle, and it will take years.
Nothing has been proven in the criminal case against any of the accused.
Frequently Asked Questions
Have the Sartor executives been convicted?
Not in the criminal case. A court ordered pre-trial detention on 18 August 2026, a precautionary measure while the investigation continues. Separately, the regulator CMF fined eight of the eleven in November 2025 and barred them from fund-manager boards for five years — an administrative sanction, not a criminal conviction.
Who is in custody?
Pedro Pablo Larraín Mery, Carlos Emilio Larraín Mery, Michael Clark Varela and Sergio Yáñez Astete. Eleven people were formally placed under investigation; the others received house arrest or travel bans.
How much money is involved?
The formal charging itemises US$78,562,257 plus 104,640,516,271 Chilean pesos, about US$193 million at the 18 August exchange rate. Prosecutors have described a range of US$100 million to US$200 million; lawyers for affected investors put it above US$200 million.
What are they accused of?
Disloyal administration, giving false information to the market, incompatible negotiation, fraud, failing to launch a mandatory tender offer, and money laundering. The court found six of the seven alleged offences established for the custody ruling and rejected the simulated-contract allegation.
Who is Michael Clark?
A former director of Sartor’s fund manager and, until 23 April 2026, president of Azul Azul, the company that runs the football club Universidad de Chile.
What has the regulator done?
The CMF suspended contributions in November 2024, revoked the manager’s licence that December and again in November 2025 alongside fines of 367,500 UF. On 10 August 2026 the Supreme Court annulled the first revocation on due-process grounds, leaving the second intact. Sartor AGF remains in liquidation.
Connected Coverage
Sources: The Clinic — court orders pre-trial detention in the Sartor ; Diario Financiero — six of seven offences found established; Publimicro — prosecutors put the harm at US$193 million; CMF — sanctions of 367,500 UF against former Sartor director; BioBioChile — Supreme Court annuls the first CMF revocation
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